Empirical links between housing markets and economic resilience

Abstract

RÉSUME Empirical Links Between Housing Markets and Economic ResilienceHousing markets, which are large and subject to sharp swings, shape to a great extent countries' exposure to economic crises and their capacity to recover from them. This paper analyses the transmission of housing-related shocks to the real economy: it investigates the role that policy plays in (a) mitigating or amplifying shocks and (b) facilitating or hampering a recovery. It considers macroprudential measures, rental regulation, taxation and land use restrictions. The aim is to investigate, which housing policy-related reforms can foster greater economic resilience. Among other results, it finds that a tighter macroprudential stance is generally linked to a lower likelihood of economic crisis and that higher effective rates of housing taxation are associated with smoother housing cycles. JEL Classification codes: E37, E5, R31De taille importante et sujets à de brusques retournements de cycle, les marchés du logement sont, dans une large mesure, un déterminant de l'exposition d'un pays aux crises économiques et de sa capacité à s'en redresser. On analyse dans cette étude la transmission des chocs liés au secteur du logement dans l'économie réelle et l'on s'interroge sur le rôle des politiques publiques et comment elles (a) atténuent ou amplifient les chocs, et (b) facilitent ou entravent le redressement de l'économie. Sont examinées les mesures macroprudentielles, la réglementation locative, la fiscalité et les restrictions à l'occupation des sols. L'objectif est d'examiner, parmi les réformes de la politique du logement, celles qui sont susceptibles d'accroître la résilience de l'économie. Entre autres résultats, on observe qu'une orientation macroprudentielle plus restrictive va généralement de pair avec une plus faible probabilité de crise économique, et qu'une augmentation des taux d'imposition effectifs de l'immobilier résidentiel s'accompagne d'un lissage des cycles sur le marché du logement.Classification JEL : E37, E5, R31

How responsive are housing markets in the OECD? National level estimates

“…By contrast, lower elasticities are found in continental Europe (Austria, the Netherlands and Switzerland), 2. Restricting housing supply also increases the opportunity cost of vacancy, but empirically the mismatch effect dominates the opportunity-cost effect (Cheshire, Hilber and Koster, 2018 [7]).…”

“…Available land is measured as the share of non-water surfaces in a country that is not (yet) occupied by buildings. 7 Figure 6 shows the share of developed land over total available land. Countries with currently limited artificial surfaces compared with the total available land could face low geographic constraints to expand further the share of urban land, and hence show a high elasticity of supply.…”

“…The second one (discussed further below) is the change in built-up area per capita observed over the period 1975-1990. 7. In Saiz's (2010 [22]) analysis, available land is also identified by excluding steep surfaces.…”

The Future of Housing: Policy Scenarios

“…This paper sheds light on these issues by developing a simulation framework to provide a baseline and policy scenarios for residential investment, the housing stock and house prices until 2050. The simulation framework builds on recent analyses undertaken for the Working Party, which investigated the fundamental and policy drivers of housing supply and prices at the national and regional level (Cavalleri, Cournède and Özsöğüt, 2019 [1]; Bétin and Ziemann, 2019 [2]). It extends the findings from this analysis in a way that is suitable for long-term projections and combines the results with the latest update of the OECD Economic Outlook long-term baseline scenario for key economic aggregates.…”

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